BUSINESS SEGMENT AND FOREIGN INFORMATION

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT AND FOREIGN INFORMATION

The Company consists of two reportable insurance business segments: Aflac Japan and Aflac U.S., both of which sell supplemental health and life insurance. Operating business segments that are not individually reportable and business activities not included in Aflac Japan or Aflac U.S. are included in the "Other business segments" category.

We do not allocate corporate overhead expenses to business segments. We evaluate and manage our business segments using a financial performance measure called pretax operating earnings. Our definition of operating earnings includes interest cash flows associated with notes payable and excludes the following items from net earnings on an after-tax basis: realized investment gains/losses (securities transactions, impairments, and the impact of derivative and hedging activities), nonrecurring items, and other non-operating income (loss). We then exclude income taxes related to operations to arrive at pretax operating earnings. Information regarding operations by segment for the years ended December 31 follows:

(In millions)	2013					2012				2011
Revenues:
Aflac Japan:
Net earned premiums:
Cancer		$	6,123				$	7,537			$	7,541
Medical and other health		4,282					5,244				5,158
Life insurance		4,577					4,370				2,920
Net investment income		2,651					2,845				2,688
Other income		55					57				46
Total Aflac Japan		17,688					20,053				18,353
Aflac U.S.:
Earned premiums:
Accident/disability		2,284					2,213				2,194
Cancer		1,283					1,282				1,258
Other health		1,334					1,259				1,061
Life insurance		252					242				230
Net investment income		632					613				588
Other income		6					19				10
Total Aflac U.S.		5,791					5,628				5,341
Other business segments		49					46				54
Total business segment revenues		23,528					25,727				23,748
Realized investment gains (losses)		389			(1)		(349		)		(1,552		)
Corporate		302					262				241
Intercompany eliminations		(308		)			(276		)		(266		)
Other non-operating income (loss)		28					0				0
Total revenues		$	23,939				$	25,364			$	22,171

⁽¹⁾ Excluding a gain of $10 in 2013 related to the interest rate component of the change in fair value of foreign currency swaps on notes payable which is classified as an operating gain when analyzing segment operations

(In millions)	2013					2012				2011
Pretax earnings:
Aflac Japan		$	3,628				$	3,904			$	3,829
Aflac U.S.		1,038					997				904
Other business segments		(1		)			(3		)		1
Total business segment pretax operating earnings		4,665					4,898				4,734
Interest expense, noninsurance operations		(198		)			(184		)		(168		)
Corporate and eliminations		(68		)			(56		)		(64		)
Pretax operating earnings		4,399					4,658				4,502
Realized investment gains (losses)		389			(1)		(349		)		(1,552		)
Other non-operating income (loss)		28					(7		)		0
Total earnings before income taxes		$	4,816				$	4,302			$	2,950
Income taxes applicable to pretax operating earnings		$	1,512				$	1,561			$	1,556
Effect of foreign currency translation on operating earnings		(357		)			8				169

⁽¹⁾ Excluding a gain of $10 in 2013 related to the interest rate component of the change in fair value of foreign currency swaps on notes payable which is classified as an operating gain when analyzing segment operations

Amounts prior to 2012 have been adjusted for the adoption of accounting guidance on January 1, 2012 related to deferred policy acquisition costs.

Assets as of December 31 were as follows:

(In millions)	2013				2012				2011
Assets:
Aflac Japan		$	102,973			$	113,678			$	101,692
Aflac U.S.		16,112				16,122				13,942
Other business segments		155				154				160
Total business segment assets		119,240				129,954				115,794
Corporate		19,909				20,318				16,182
Intercompany eliminations		(17,842		)		(19,178		)		(15,739		)
Total assets		$	121,307			$	131,094			$	116,237

Amounts prior to 2012 have been adjusted for the adoption of accounting guidance on January 1, 2012 related to deferred policy acquisition costs.

Yen-Translation Effects: The following table shows the yen/dollar exchange rates used for or during the periods ended December 31. Exchange effects were calculated using the same yen/dollar exchange rate for the current year as for each respective prior year.

	2013				2012				2011
Statements of Earnings:
Weighted-average yen/dollar exchange rate		97.54				79.81				79.75
Yen percent strengthening (weakening)		(18.2		)%		(.1		)%		10.0		%
Exchange effect on net earnings (in millions)		$	(312	)		$	38			$	160

Amounts prior to 2012 have been adjusted for the adoption of accounting guidance on January 1, 2012 related to deferred policy acquisition costs.

	2013				2012
Balance Sheets:
Yen/dollar exchange rate at December 31		105.39				86.58
Yen percent strengthening (weakening)		(17.8		)%		(10.2		)%
Exchange effect on total assets (in millions)		$	(17,836	)		$	(10,861	)
Exchange effect on total liabilities (in millions)		(19,806		)		(11,441		)

Transfers of funds from Aflac Japan: Aflac Japan makes payments to the Parent Company for management fees and to Aflac U.S. for allocated expenses and profit repatriations. Information on transfers for each of the years ended December 31 is shown below. See Note 13 for information concerning restrictions on transfers from Aflac Japan.

(In millions)	2013			2012			2011
Management fees		$	37		$	30		$	28
Allocated expenses		74			58			43
Profit repatriation		771			422			143
Total transfers from Aflac Japan		$	882		$	510		$	214

Property and Equipment: The costs of buildings, furniture and equipment are depreciated principally on a straight-line basis over their estimated useful lives (maximum of 50 years for buildings and 20 years for furniture and equipment). Expenditures for maintenance and repairs are expensed as incurred; expenditures for betterments are capitalized and depreciated. Classes of property and equipment as of December 31 were as follows:

(In millions)	2013			2012
Property and equipment:
Land		$	168		$	161
Buildings		444			535
Equipment and furniture		329			326
Total property and equipment		941			1,022
Less accumulated depreciation		460			458
Net property and equipment		$	481		$	564

Receivables: Receivables consist primarily of monthly insurance premiums due from individual policyholders or their employers for payroll deduction of premiums, net of an allowance for doubtful accounts. At December 31, 2013, $731 million, or 82.9% of total receivables, were related to Aflac Japan's operations, compared with $566 million, or 58.2%, at December 31, 2012.